OnLive lives, but employees laid off

Reports say the cloud gaming service has fired all employees

UPDATE: OnLive has released an email statement to outlets [Via The Verge]:

"We can now confirm that the assets of OnLive, Inc. have been acquired into a newly-formed company and is backed by substantial funding, and which will continue to operate the OnLive Game and Desktop services, as well as support all of OnLive's apps and devices, as well as game, productivity and enterprise partnerships. The new company is hiring a large percentage of OnLive, Inc.'s staff across all departments and plans to continue to hire substantially more people, including additional OnLive employees. All previously announced products and services, including those in the works, will continue and there is no expected interruption of any OnLive services."

Original story: According to recent reports, cloud gaming service OnLive has fired all employees, but will continue on in some form. This story kicked off earlier today, when InXile Entertainment founder Brian Fargo tweeted about an email he received from an OnLive employee.

"Just received an email that OnLive is closed as of today!" tweeted Fargo.

"Their employees are sending out emails that OnLive will be closed by the end of the day," he added.

"I wanted to send a note that by the end of the day today, OnLive as an entity will no longer exist. Unfortunately, my job and everyone else's was included. A new company will be formed and the management of the company will be in contact with you about the current initiatives in place, including the titles that will remain on the service," said the email Fargo received, which he later tweeted the contents of. That email was recalled by the sender according to Fargo.

OnLive later responded, saying that the reports of the company's closure were in error, but that it decline to speak about rumors of layoffs.

"We don't respond to rumors, but the service is not shutting down," and OnLive spokesperson told AllThingsD when asked about the company shutting down.

"No, let me be clear. We are not going out of business," OnLive director of corporate communications Brian Jaquet told Forbes when asked.

Independent sources confirmed to GameFront and Gamasutra that layoffs had indeed happened at the company. Another inside source told Kotaku that OnLive CEO Steve Perlman called an all hands meeting this morning to announce that the company would be filing for bankruptcy in California. Kotaku's source added that some employees will be moved to another company created from the husk of OnLive, with the cloud service continuing on.

OnLive has not confirmed or denied the latter reports.

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OnLive always felt like it was going come to this ending. I remember standing in line at the Eurogamer expo last year waiting for a free console thinking - "How many are they giving away" - that single event must have cost millions, and i feel that many people didn't have the internet connection to support it.

Even though I did have the connection - I ended up very rarely using OnLive even though I bought several games just to support the service. My major gripe that forced me away was that even with my 30MBPS connection and minuscule pings, the quality of the visuals were very poor. Dirt3 being a massive case. I always felt that if they sold the tech to MS or Sony it would be a fantastic system for demos. Give a player a 3 hour pass to a game and stream it live so no downloads. Insta Demo!

It is a massive shame however because the "dash board" has to be the least distracting in terms of "this is a games-playing device" non of this Xbox "watch a film! Listen to music!" and the controller was really fantastic; might try and buy the universal controller before they disappear. As for the staff - while it is regrettable when anyone loses their job, I'll never forget how rude two of their employees where at the Eurogamer Expo - rudeness in uniform is always a sign of unhappiness with a company as it shows you don't want to present the company in a good way.

Hmmm... that's sad news, but it's also a hit in the head to those who think streaming is the way to go and the only way to go for all games. Hopefully all who are out of work will find new employment elsewhere.

Hmmm. This smells bad. A company I worked for, for a while did a similar trick to get out of existing contractual arrangements, and as an easy way to terminate employee contracts, stock arrangements, and so on.

I always wondered where their money was going to come from - another of the issues with this business model, is that in the long term its *cheaper* for gamers to just buy a console (and get access to games - borrowed/2nd-hand/rented) etc. And you own what you buy, rather than just "lease it".

Yeah, surely this is what Chapter 11 bankruptcy is for? This looks as though it's a rather lame attempt at rearranging the company, without having to dip into (entirely legal and very useful) temporary administration proceedings.

@Morville: in chapter 11 the BK court chooses who runs the company and there's no guarantee it will be the existing management. No point pulling a sleazy manoeuvre like this if you get kicked out with the rest of the staff.

When I tried to turn remove my billing credit card, I got a notice saying that there was an error, and nothing changed. Tried all available ways to disconnect by billing card, wonder if this will turn into a consumer nightmare too?

pay to play services who then make it difficult to stop billing lower overall consumer confidence by an order of magnitude. Next time they just won't pay for the game with their card, everyone loses.

Sadly I've always seen where this was headed from day one. It's not so much the technology as the restrictions behind it. The intelligent gamer isn't fooled by the play any game for a monthly fee idea and anyone who has ever played an Online game of battlefield or COD will be familiar with lag. Heck if a popular demo comes out on PSN or XBox Live I can't even download it at a decent speed and they have pretty ridiculous infrastructures in place. How the heck was Onlive going to handle streaming something like COD to millions of subscribers.

I'm an eternal optimist when it comes to technology the problem is I'm also a qualified software engineer and know how technology actually works. How you'd need to scale it to do what they claim to be trying to do etc. etc. I didn't see that kind of money coming into the company at any stage so knew almost immediately that no matter what, this was going to be a downward spiral of disappointments and rude awakenings.

@Peter Dwyer: the immediate problem that took OnLive down seems to be having 4x more capacity than users!

That's not to say the arithmetic makes sense even if they could get customers, they aren't charging enough to cover the server costs. Or at least cover them and deliver a worthwhile service. Tried it just before the announcement and the rendering quality was significantly lower than at launch. I guess they cant afford enough processing power to cover the peak users they do have and don't have enough users to average out the peak.

The need for local data centres to minimise lag means they can't aggregate capacity either. OnLives problem really is not attracting enough customers to make the server centre arithmetic work to overcome the physics.

as is the case with many tech start ups, I'd say the business was likely to be in the business of being acquired. Some business plans take exactly that approach, and that's ok. The problem is that the longer you have to bankroll an idea or concept, the longer you have to go on looking ever more attractive and relevant than you were yesterday, in order to justify your increasing debts and company valuation, should that opportunity arise. That's obviously wasn't happening. Debts cleared, probably a new director in place, and some unhappy investors I would guess.

I personally am not attracted to onlive or streaming video games at all. And for people that say this is the future of video games, Id like to tell them, pretty good start. The only thing I feel sorry for is for the employees who lost their job.